Analysis of the "Chopping Chives" Phenomenon in Investment: 6 Pitfall Avoidance Tips to Help You Stay Away from Loss Traps

In the fields of stocks, funds, forex, and other investments, novice investors often hear a term: “being cut like chives.” Many people, after experiencing investment losses, mock themselves as “chives,” but what exactly does “being cut like chives” mean? Why do some people become chives? This article will deeply analyze this phenomenon and provide practical strategies.

What is the essence of “being cut like chives”?

The metaphorical meaning of the term

Chives are a resilient vegetable that can quickly regenerate after being cut, growing new shoots one after another. This characteristic is borrowed into the investment field to describe retail investors who repeatedly suffer losses in the market. They are like continuously harvested chives—after losing money, a new group of investors enters the market, and the cycle repeats.

Application in the financial markets

The term “being cut like chives” first appeared in Chinese financial circles and later spread to other Asian investment markets. It reflects the asymmetry among market participants: inexperienced retail investors lacking information and decision-making skills often incur losses, which become profit sources for large investors or institutions.

Who are the “chives” being cut?

The innate disadvantages of retail investors

The “chives” being cut are usually retail investors, especially beginners. Compared to large investment institutions and seasoned investors, retail investors face three major disadvantages:

First is information asymmetry. Institutional investors can access real-time, professional market data and analysis, while retail investors often lag behind.

Second is the huge difference in capital scale. Small amounts of capital are more easily shaken out during market volatility, whereas large funds have buffers.

Third is the lack of experience and knowledge reserves. Many retail investors lack basic investment methodologies and are easily swayed by market sentiment.

The active moves of market makers

In contrast to retail investors are market makers or big players. They leverage their advantages in information, capital, and experience, using carefully planned tactics to attract retail investors to enter, then sell at high points, profiting from retail investors’ losses. This process is what is called “cutting chives.”

What common traits do investors who get cut share?

1. Blindly follow the trend to buy

Many losing investors fall into the trap of following the crowd. They buy whatever others buy, jump into popular concepts, but never conduct independent research and analysis. This behavior causes them to frequently stumble—either buying poor-quality assets or entering at inopportune times.

2. Lack of market awareness

The typical characteristic of “stock market chives” is insufficient awareness. They have only a superficial understanding of how the market operates, the nature of investment targets, and fundamental and technical analysis. Such investors are easily influenced by market fluctuations and others’ advice, making it hard to make rational decisions.

3. Lack of profit-taking and stop-loss concepts

Many losers are greedy when making small profits, wanting more, and thus miss the best timing to sell; when losing money, they are unwilling to accept it, hoping for a market reversal, and delay stop-loss, resulting in greater losses. This psychological weakness is a key reason for retail investors’ losses.

4. Chasing highs and selling lows

The most common mistake among market chives is emotional trading. When stock prices are high, they are influenced by market enthusiasm and buy blindly; when prices fall, they panic and sell hastily. This buy-high-sell-low pattern almost inevitably leads to losses.

The typical process of “cutting chives”

Market “cutting chives” phenomena usually occur during the transition between bull and bear markets.

In mid-bull market, market makers and retail investors enjoy the gains from rising markets, both making money. But in late bull market, market makers, with their superior information, are the first to sense risk signals and start gradually exiting. Meanwhile, new retail investors enter confidently, believing they have seized the opportunity, unaware they are becoming the next batch of “chives.”

As the market enters early bear market, short-term rebounds during the decline can create the illusion of “market bottoming,” attracting retail investors to buy the dip. At the same time, existing holders refuse to believe the overall trend has turned downward, holding on stubbornly, and are continuously harvested. Market makers take advantage of this to continue selling off and exit completely.

Throughout this process, retail investors’ psychological journey resembles a roller coaster: first excited by others’ profits and entering the market, then regretful after losses, and finally falling into despair.

How to avoid becoming a stock market chive? 6 practical tips

1. Choose an investment method suitable for yourself

Different investment products have their characteristics. Stocks have low entry barriers and high liquidity but are volatile; funds offer diversified risk and are suitable for long-term investment; forex markets operate 24 hours, providing two-way profit opportunities but with high risks; CFDs allow small capital to leverage large gains, but leverage risks are significant.

Selecting products based on your risk tolerance, investment horizon, and capital size is the first step. Blindly following trends into unsuitable areas already sets you on the path to becoming a chive.

2. Invest through正规 platforms

Choosing regulated, transparent, and reasonably priced investment platforms is crucial. Check whether the platform is authorized by relevant financial regulators, understand its fee structure, and evaluate its risk control measures (such as stop-loss functions, negative balance protection). A good platform can help protect you from unnecessary risks.

3. Build your own investment methodology

Smart investors are learners and thinkers. Before trading, study basic investment knowledge carefully, analyze market and target fundamentals, and gradually develop your own judgment standards. Avoid blindly trusting so-called “experts”; instead, follow the principle “listen to the majority, consider minority opinions, and make your own decisions.”

A strong mindset is equally important. The biggest enemy in investing is often your own emotions. As Buffett said: “Be fearful when others are greedy, be greedy when others are fearful.” Have the courage to buy in bear markets and the discipline to restrain yourself in bull markets—that’s the mark of a mature investor.

4. Strictly enforce profit-taking and stop-loss discipline

Set clear profit targets and stop-loss levels, and strictly adhere to them regardless of market enthusiasm. For example, set a 30% profit-taking goal; once reached, sell decisively to lock in gains. Also, set a rule to stop-loss if losses exceed a certain percentage.

Many modern trading platforms offer automatic stop-loss features; utilizing these tools can prevent significant losses due to neglecting market changes.

5. Diversify investments to reduce risk

“The eggs should not all be in one basket” is an old investment adage. Spread your capital across multiple assets and directions to reduce the impact of failure in any single investment.

Additionally, learn to use both long and short trading strategies, so you can seize opportunities during market declines rather than passively waiting for upward trends.

6. Obtain market information promptly and adjust strategies

Technical analysis and fundamental analysis are two dimensions of market research. Technical analysis is intuitive and easy to learn, but the importance of fundamentals cannot be ignored. Markets change rapidly; missing major news can turn profits into losses.

Develop a habit of obtaining market information through financial news websites, investment apps, etc., but the most efficient way is to use the built-in tools provided by trading platforms—such as economic calendars, real-time news, and live quotes—these are filtered and most relevant to trading needs. Trading while staying updated helps you better grasp market timing.

Summary

Becoming a “chive” in the stock market is not destiny but the result of a series of avoidable poor decisions. Through the six steps of learning and practice outlined above, novice investors can greatly reduce the risk of being cut.

However, it’s important to realize that there are no shortcuts in investing. Even understanding these principles, becoming a true investment expert still requires experience accumulation and knowledge deepening. If you have already experienced losses, the most important thing is to correct your mindset, carefully review each trade, and avoid repeating the same mistakes. Every loss is a valuable learning opportunity. Persist, and you will eventually evolve from a chive into a genuine investor.